Index [the-eye.eu] fileArizona Corporation Commission, 79 Arizona Southern Baptist Convention, 51–52 Arms-length transactions pricing policies, 58, 58ex., 158–159 revaluation of

Index

Note: Page numbers in italics indicate figures; page numbers followed by n indicate material in footnotes; page

numbers followed by t indicate tables; page numbers followed by ex. indicate exhibits. Sections 1-4 are indexed

fully; page ranges only are given for case studies in Appendix A; footnotes are indexed fully throughout.

A

AboveNet, 49

“Access charges,” 49

Accounting and Auditing Enforcement Releases (SEC)

No. 1227, 73n

No. 1393, 20n, 139n, 140n, 142n, 143n, 217n–219n, 221n, 222n

No. 1394, 142n, 218n

No. 1706, 138n, 216n

No. 2220, 148n, 238n

Accounting and billing systems, 74–75

Accruals, 133–135

Ace Scavenger, 33

Acquisitions

aggressive strategy, 99–102

growth through, 39–40, 49–50

Active trading, MTM accounting and, 122

Advanced Environmental Technical Services (AETS), 36t

Advertising space, sale of, 154–155

AETS (Advanced Environmental Technical Services), 36t

Allegheny International, 44

Allgyer, Robert, 12–13

ALO, 77

deficit situation, 78–80

inherent risk assessment, 51, 52, 53

presentation and disclosure, 149–152

significant transactions, 161, 162–163

unaudited condensed balance sheet, 80

See also Baptist Foundation of Arizona

American Household, 46

America Online, 40

Amortization periods, excessive, 127–128

ANS Communications, 40

Arizona Corporation Commission, 79

Arizona Southern Baptist Convention, 51–52

Arms-length transactions

pricing policies, 58, 58ex., 158–159

revaluation of assets by, 83, 85ex.

Arthur Andersen LLP, 55, 63, 68, 70t, 111, 121, 157

advice against top-side adjustments, 106

auditing relationships, 158–159

client internal controls and. See Internal control systems

client relationships, 23–25

close ties to Enron, 4–5

due professional care, 11–14, 19–21

duty of confidentiality, 159

independence of auditor, 3–5, 11–14, 23–25

lack of consultation with client, 96, 97

litigation against, 3, 11–12, 12n, 19–20, 29

on NBV method, 127

professional responsibility, 15–18

Professional Standards Group, 8–10

provision of nonaudit services, 3–4

quality assurance, 7–10

recommendations on impaired assets, 130

related party transactions and, 151–152

relationships with third parties, 25

response to employee concerns, 79–80

revaluation of assets, 81–88

SEC charges, 147–148

Arthur Andersen LLP (Continued)

unqualified audit opinions, 19–21, 78, 81, 88ex., 162

vouching transactions, 163

write-offs of impaired assets, 126–127

Asset(s)

depreciation and amortization of, 129, 130

fixed asset process, 129

impairment of, 126–127, 130

purchased in IRU swap transactions, 118–119

revaluation of. See Revaluation of assets

sale of. See Sale of assets

salvage value estimates, 69, 130

useful life of, 127–128, 130

valuation of. See Asset valuation

write-downs of, 138, 140

See also Natural resource assets

“Asset light” strategy, 31–32

Asset valuation, 23–25

auditor’s knowledge of, 159

audit relationships and, 158–159

formulas for, 122

guidelines for, 83, 85ex.

recognizing changes in value, 123

valuation assertions, 82–83, 158–159

See also Revaluation of assets

AT&T, 39, 40, 41, 48, 49

Auditing and Enforcement Releases (SEC)

No. 1405, 12n, 13n, 192n, 193n

No. 1410, 191n, 192n, 194n

Auditing Standard No. 2 (PCAOB), 61, 109

B

Backdated contracts, 120

Bank-like operations, 53

Bankruptcy, 7, 39, 46, 51, 95–96

Bankruptcy Court Examiner’s Report, 95n, 96n, 97n, 98n

Baptist Foundation of Arizona (BFA)

case study, 241–250

inherent risk assessment, 51–54

internal control systems, 77–80

presentation and disclosure issues, 149–152

significant transactions, 161–164

See also ALO; New Church Ventures

Barclays Bank, 113, 114

Barrionuevo, Alexei, 4n, 175n

“Basketing,” 126

Bass, Carl E., 9n, 9–10, 177n, 178n

Bauer, Thomas H., 115n, 172n

Bauerle, John, 163

Beaumont, Ron, 93

Berardino, Joseph F., 3n, 7n, 29n, 63n, 111n, 121n, 167n

BFA. See Baptist Foundation of Arizona

Big River Funding LLC, 113, 114

Bill and hold sales, 21, 142–143

Blockbuster Video, 123

Boucher, Rowland, 58ex.

Brabbs, Steven, 16

Brannigan, Martha, 45n, 143n, 215n, 220n

Broadwing, 48

Brooklyn Union, 31

Brooks Fiber Properties, 40

Bryan-Low, Cassell, 20n, 220n

Bryce, Robert, 64n, 122n, 173n

Budgetary resources, lack of, 96, 97

Budget process, 106

Bufkins, William R., 3n, 7n, 29n, 63n, 64n, 111n, 121n, 122n, 123n, 167n, 173n, 174n

“Bundling,” 126

Buntrock, Dean, 11, 33, 67, 68, 69t, 73, 105, 106, 125, 129

Byrnes, Nanette, 4n, 175n

C

Cable & Wireless, 119, 120, 146, 147

California Public Employees Retirement System (CalPERS), 112–113, 114

CAOs (chief accounting officers), 12

Capital equipment, sale of, 101

Capitalization of costs, 119, 125–128

construction costs, 127

GAAP and, 125–126, 127

other costs, 127–128

permitting costs, 126–127

Case studies

Baptist Foundation of Arizona, 241–250

Enron, 167–178

The Fund of Funds, 253–260

Qwest Communications International, 227–238

Sunbeam, 213–223

Waste Management, 181–194

WorldCom, 197–209

Cash, testing sources of, 163–164

Cash reserve accounts, 137–140

as “cookie jar,” 137–138, 139

Cost of Goods Sold, SG&A and Estimated Loss categories, 138–139, 140

litigation reserves, 20, 139

“Restructuring, Impairment and Other Costs” category, 138, 140

restructuring charges, 138, 139

special purpose entities, 113, 114

using to offset current expenses, 139

Causey, Richard, 4–5, 10

Cercavschi, Walter, 13

CFOs (chief financial officers), 12, 96

Changes in value, recognizing, 123

Chemical Waste Management (CWM), 36t, 71t

Chewco Investments, 113, 114, 115

Chicago Flexible Shaft Company, 43

Chief accounting officers (CAOs), 12

Chief financial officers (CFOs), 12, 96

Clark, Thomas, 43

Client relationships

difficult clients, 24–25

past or future employment with auditor, 5, 12

professional responsibility and, 15–16

social relationships, 4–5

“Close the Gap,” 93

Closing revenue accounts, 93

COG (Consolidated Oil & Gas), 25, 84

Commodity markets, 31–32

Company ledgers, 98

Competition, 35, 41, 48, 49

CompuServe Corporation, 40

Computerized accounting system, lack of access to, 98

Consolidated budgets, 106

Consolidated Oil & Gas (COG), 25, 84

Consolidating revenues, 93

Contracts, backdating, 120

“Cookie jar” reserves, 137–138, 139

Cooper, Cynthia, 97

“Cooperative advertising” reserve, 20

Cornfield, Bernie, 55

Corporate Unallocated revenue account, 92, 93

Cost(s)

capitalization of. See Capitalization of costs

commingling of, 126

line cost accruals, 133–135

restructuring costs, 20, 137–140

Cost of goods sold, restructuring charges, 138–139, 140

Cowett, Edward, 57–58, 58ex., 83

Crotts, Glen, 52

Crotts, William P., 51, 52, 77, 161

Culp, Christopher L., 31n, 32n, 169n, 179n

Current expenses, offsetting, 139

Customer discounts, 141–142

CWM (Chemical Waste Management), 36t, 71t

D

Department of Justice, U.S., 41

Depreciation and amortization, 127–130

DEX (Qwest Dex Inc.), 153–155

Dharan, Bala G., 3n, 7n, 29n, 63n, 64n, 111n, 112n, 121n, 122n, 123n, 167n, 173n, 174n, 179n

Digex, 49

Disclosure(s)

false disclosures, 153–155

lack of, by top management, 106

presentation and disclosure issues, 149–152

related parties disclosure, 150–152

“Distributor program,” 142–143

Documentation, destruction of, 8, 69

Dodson, William, 113

Down payments, 162, 163–164

Due professional care

client relationships, 12

independence of auditor, 3–5, 11–14

PAJEs, 13–14

SEC suit, 11–12, 12n

unqualified opinions, 19–21

Dun & Bradstreet, 84

Duncan, David, 4–5, 8

Dunlap, Albert J. (“Chainsaw Al”), 19, 43, 44–46, 137, 141

E

Earnings before interest and tax, depreciation, and amortization (EBITDA), 154–155

Earnings targets

aggressive, 120, 145

in annual budget process, 106

EBITDA targets, 154–155

industry conditions and, 100

Ebbers, Bernie, 15, 39, 91, 92, 93, 95, 96–97, 133

EBITDA (earnings before interest and tax, depreciation, and amortization), 154–155

Echols, John, 10

EITF 90-15, 112

Electric power contracts, 123

Eli Lilly, 123

Elkind, Peter, 4n, 5n, 30n, 122n, 123n, 168n, 173n, 174n, 175n, 176n

Emshwiller, John R., 5n, 176n

Enron Corporation

bankruptcy of, 7


changes in accounting procedures, 65

close ties to Arthur Andersen, 4–5

company background, 30, 111–112, 121–122

executive incentives, 63–64

independence of auditor, 3–5



IRU swap, 119, 120

nonaudit services provided to, 3–4

performance review system, 64–65


revenue recognition, 121–123

SEC investigation of, 10, 10n

special purpose entities, 111–115, 114

use of mark-to-market accounting, 122–123

Entertainment on-demand, 123

Environmental regulation, 35

Environmental reserves, 139

EPI Printers, 21

“Equity loans,” 113, 114, 115

Estes, Ron, 164

Estimated Loss from Discontinued Operations account, 138–139, 140

Ethical issues

due professional care, 11–14, 19–21

independence of auditor, 3–5, 23–25



EUnet International Limited, 49

Executive compensation, 63–64, 92, 157

Exodus, 49

F

Farnsworth, Clyde H., 56n, 254n

FASB (Financial Accounting Standards Board), 112

Fastow, Andrew, 8, 9, 112n, 113, 171n

Fees, 12, 16

Financial Accounting Standards Board (FASB), 112

Financial Accounting Statement No. 34, 127

Financial management information, 74

Financial services industry, 122

Flag Telecom, 119

FMC Holdings, Inc., 163

FOF. See The Fund of Funds

FOF Proprietary Funds, Ltd. (FOF Prop), 56

asset valuation, 23–24, 157–159

revaluation transaction, 81, 84, 86ex.

The Foundation Companies, Inc. (TFCI), 163–164

Foundation Investments, Inc., 163

Frank, Robert, 19n, 43n, 44n, 45n, 46n, 137n, 141n, 214n, 215n, 223n

Fraud

accounting reserves, 137–140


netting, 68

senior executives charged with, 68–69, 69t–71t, 71

“top-side” adjustments, 68, 105–106

use of geography entries, 68

Fraud risk assessment

refusal to provide information, 79–80


See also Inherent risk assessment

Fraudulent revenue recognition

internal control systems and, 99–102

on IRU sales, 145–148

on IRU swaps, 117–120

Friend, Harold, 150–151, 162, 163

The Fund of Funds, Limited, et al v. Arthur Andersen & Co., et al, 23n, 56n, 57n, 82n–88n, 158n, 159n, 254n,

256n–260n

The Fund of Funds (FOF), 81

asset valuation, 157–159


company background, 55–56

expansion, 57

independence of auditor and, 23–25

industry competition, 56


pricing policies, 57–59, 58ex.


SEC sanctions against, 56, 57

G

GAAP. See Generally Accepted Accounting Principles

GAIN (Global Auditing Information Network), 97

Gain on sale of assets, 8

“Gap-closing” plans, 155

General Electric, 44

Generally Accepted Accounting Principles (GAAP)

auditing practices not in compliance with, 20, 21

on capitalization of costs, 125–126, 127

on cash reserves, 138

failure to comply with, 147

on line cost accruals, 134

on revenue recognition, 118

specification of assets sold, 146

statements not in conformity with, 11

on upfront revenue recognition, 145–146

Geography entries, 68

Getz, Herbert, 70t

Global Auditing Information Network (GAIN), 97

Global Crossing, 48, 118, 119, 146, 147

Government regulation

environmental, 35

impact of change in, 49

of passive trustee operations, 53–54

religious exemptions to, 53

Sarbanes-Oxley Act of 2002, 1

Telecommunications Act of 1996, 39–40, 49

See also specific regulatory agencies

“Grooming,” 147

GTE, 48, 49

H

Hanke, Steve H., 31n, 32n, 169n, 179n

Harlow, Phillip, 20, 21

Harris, Nicole, 19n, 220n

Hau, Thomas, 12, 68, 70t, 127

Healy, Paul M., 30n, 31n, 32n, 64n, 123n, 168n, 169n, 174n

Herrick, Thaddeus, 4n, 175n

HNG, 64

Hoover, Dwain, 150–151, 162, 163

Houston Natural Gas, 30, 111, 121

Hunsinger, Jalma, 150–151

I

IAMC, 159

Icon CMT Corp., 49

Impairment of assets, 126–127, 130

Indefeasible rights of use (IRUs), 48, 145–148

failure to comply with GAAP, 147

nonrecurring revenue from, 101, 102t

ownership transfer issues, 146–147, 148

portability and, 146

SEC charges, 147–148

swaps. See IRU swap transactions

Independence of auditor

client relationships, 24–25

due professional care, 3–5

National Resources Fund Account, 23–24


relationships with third parties, 25

Industry conditions

competition, 35, 41, 48, 49, 56

earnings targets and, 100

financial services industry, 122

inherent risk assessment, 27, 41

natural gas industry, 30, 112

telecommunications industry, 91

Information

incomplete or inaccurate, 74–75

refusal to provide, 79–80

restricted access to, 16–17, 98

Infrequent items, 139

Inherent risk assessment

client’s business and industry, 27

commodity markets, 31–32

communications services business, 48–49

company history and, 33–34, 43–44

construction services business, 48

core operations and, 34–35

corporate expansion and, 35, 36t–37t

corporate restructuring and, 45–46

employee concerns, 78–80

executive leadership and, 45

growth through acquisitions and, 39–40, 49–50

industry conditions and, 35, 41


lack of, 96

“maximum risk” clients, 17–18

mutual funds, 55–59

natural gas industry, 29–32

passive trustee operation, 53–54

related parties, 52–53

religious exemptions, 53

strategic direction and, 47–48

“take or pay” contracts, 30

See also Fraud risk assessment

Institute of Internal Auditors, 97

Intel, 49

Interest, capitalization of, 125–126

Internal audit department, 96–97

Internal control systems, 61

changes in accounting procedures, 65

closing and consolidating revenues, 93

employee concerns, 77–80

executive incentives and, 63–64

fraudulent revenue recognition and, 99–102

fraudulent schemes, 68–69, 69t–71t, 71

general computing controls, 73–75

internal audits, 95–98

Monthly Revenue Report, 92

mutual funds, 81–88

performance review systems, 64–65

related party transactions, 151–152


revenue growth emphasis and, 91–93, 100

sale of assets and, 101, 101t–102t

“tone at the top” and, 99–100

“top-side” adjustments, 92, 93, 105–106

upper management turnover and, 67–68

Internet Protocol (IP) products and services, 49

Internet service providers (ISPs), 49

InterNorth, 30, 64, 111, 121

Inventory, sale of, 21, 138–139, 140

Investor Overseas Services, Limited (IOS), 23, 55–56, 81, 157, 159

Investors Continental Services, Ltd., 56

Investors Planning Corp. of America, 56

IOS (Investor Overseas Services, Limited), 23, 55–56, 81, 157, 159

IP (Internet Protocol) products and services, 49

IRUs. See Indefeasible rights of use

IRU swap transactions, 117–120

accounting for, 119–120

assets purchased in, 118–119

network planning department and, 119

use of capacity purchased, 119

See also Indefeasible rights of use

ISPs (Internet service providers), 49

Iwan, Mark, 147–148

J

Jarden, 46

Joint Energy Development Investments Limited (JEDI), 112–113, 114, 115

Joint venture interests, 163–164

Journal entries. See “Top-side” adjusting journal entries

“Junk bond” status, 30

K

Kazarian, Paul, 44

Kersh, Russell, 45

King, John, 23–25, 25n, 55, 57, 58ex., 81, 82–83, 84, 84n, 157, 158, 258n

King Resources Corporation (KRC), 23–25, 55, 57–59, 82–83, 157–159

Koenig, James, 68–69, 70t, 127

Kopper, Michael, 113

KRC (King Resources Corporation), 23–25, 55, 57–59, 82–83, 157–159

Kutsenda, Robert, 13

L

Land, 129, 130

Landfills, 126–127

Lay, Kenneth, 4, 4n, 64, 175n

LCI International, Inc., 49

LDDS (Long Distance Discount Services), 39

Legitimate business need, 231

LeMay, Ronald, 67, 68

Levitt, Arthur, 4

Line cost accruals, 133–135

GAAP and, 134

line cost expenses, 133–134

line cost releases, 134–135

Litigation reserves, 20, 139

Little River Funding LLC, 113, 114

LJM (Enron), 8–10

Lomenzo, Ron, 93

Long Distance Discount Services (LDDS), 39

Lowry, Timothy, 57

Lublin, Joann S., 19n, 43n–46n, 137n, 141n, 214n, 215n, 223n

M

Maier, Edward, 13

Management. See Top management

Management representation letter, 164

March, John, 83

Mark-to-market (MTM) accounting, 65, 122–123

Materiality of notes receivable, 151

Mayer, Jane, 4n, 175n

McDougal, Lorna, 5n, 175n, 176n

McGrath, Ann, 78, 79

MCI, 39, 40, 41

MCI WorldCom, 48, 49

McKinsey & Co., 64

McLean, Bethany, 4n, 5n, 30n, 122n, 123n, 168n, 173n–176n

McMahon, Jeffrey, 5

McNamee, Mike, 8n, 9n, 177n

McRoberts, Flynn, 5n, 176n

Mecom, John, 25, 25n, 84, 84n, 85ex., 258n

MFS, 40

Monthly Revenue Report (MonRev; WorldCom), 92, 93

Moody’s Investors Service, 30

MTM (mark-to-market) accounting, 65, 122–123

Mutual funds

asset valuation, 157–159

independence of auditor and, 23–25


internal control concerns, 81–88

Myers, David, 16–17, 134, 135

N

Nacchio, Joseph, 47, 48, 99, 100, 117, 145, 153

Napolitano, Janet, 51, 77, 149, 161

National Resources Fund Account (NRFA), 23–24, 57, 81, 82, 158

Natural gas industry, 30, 112

Natural gas trading and financing, 31

Natural resource assets

daily share value and, 82

guidelines for revaluation, 83, 85ex.

proprietary accounts, 57

revaluation of, 81–88

speculative investment in, 52, 81–82, 158

valuation of. See Asset valuation

NBV (net book value) method, 127

Negative net worth, 79

Net book value (NBV) method, 127

Net present value calculations, 163

“Netting,” 68, 127, 128

Network planning department, 119

Neuhausen, Benjamin, 8

New Church Ventures, 77

employee concerns about, 79–80

inherent risk assessment, 51, 52, 53

presentation and disclosure, 149–152

significant transactions with, 161, 162, 163

unaudited condensed balance sheet, 80

See also Baptist Foundation of Arizona

Nonaudit services, provision of, 3–4

Noncash items, 138, 140

Nonconsolidation of SPEs, 112, 115

Nonprofit organizations, religious. See Baptist Foundation of Arizona

Nonrecurring revenue items, 93, 101, 101t–102t

NRFA (National Resources Fund Account), 23–24, 57, 81, 82, 158

O

Obstruction of justice, 111

“Open access” to pipelines, 30, 31

Operating leases, IRUs treated as, 148

Oster, 44

Outside equity, 115

Ozer, Jay Steven, 78, 79

P

Paetz, Karen, 78, 79

PAJEs (Proposed Adjusting Journal Entries), 13–14

Palepu, Krishna G., 30n–32n, 64n, 123n, 168n, 169n, 174n

Pan America, 118

Passive trustee operations, 53–54

PCAOB (Public Company Accounting Oversight Board), 1, 61, 109

Performance review systems, 64–65

Permits, costs of, 126–127

Phoenix Network, Inc., 49

“Point of publication” accounting, 154–155

Portability of IRUs, 146

Powers, William C., Jr., 113n, 115n, 171n, 172n

Presentation and disclosure. See Disclosure(s)

Present value of future inflows, 123

Price, Michael, 44

Professional responsibility

audit approach and, 17–18

independence of auditor, 11–14

relationship with client, 15–16

restricted access to information, 16–17

Professional Standards Group (PSG; Andersen), 8–10

Profit/sales ratio, 159

Proposed Adjusting Journal Entries (PAJEs), 13–14

Proprietary accounts, 57

Pseudonyms, 150–151

PSG (Professional Standards Group; Andersen), 8–10

Public Company Accounting Oversight Board (PCAOB), 1, 61, 109

Q

Quality assurance, 7–10

Qwest Communications International


failure to comply with GAAP, 147




IRU swap transactions, 117–120

ownership transfer issue, 146–147

portability issue, 146


SEC charges against, 147–148

Qwest Dex Inc. (Dex), 153–155

R

Raff, Robert, 82–83

Raghavan, Anita, 3n, 8n, 9n, 10n, 174n, 177n, 178n

“Rainy day” funds, 135

Raptors, 9

Real estate investments

related party transactions, 77n, 78–80

by religious nonprofit, 51–54, 77–80

significant transactions, 161–164

Regulatory requirements. See Government regulation

Related parties disclosure, 150–152

Related party transactions

down payments obtained from, 162, 163–164

inherent risk assessment and, 52–53


notes receivable, 151

real estate investments, 77n, 78–80

revaluation of assets, 84, 86ex.–88ex.

year-end, significant, 162

Religious exemptions, 53

Repair cost capitalization, 125

Reserves. See Cash reserve accounts

Restatement of earnings

fraud risk assessment and, 43, 46

internal audits and, 95–98

internal controls and, 67

pretax earnings overstated, 73, 125

restructuring reserves, 137–140

revenue recognition, 143

Restructuring costs, 20

accounting reserves and, 137–138, 139

cost of goods sold, 138–139, 140

Restructuring efforts, 45–46

Revaluation of assets, 81–88

on daily share value, 82

guidelines for, 83, 85ex.

related party transactions, 84, 86ex.–88ex.

transaction as basis for, 82–83

unqualified audit opinion, 81, 88ex.

See also Asset valuation

Revenue growth emphasis, 91–93, 100

Revenue recognition

acceleration of, 141–142, 143, 153–155

customer discounts and incentives, 141–142

restatement of revenues, 143

sales to distributors, 142–143

SFAS criteria for, 163–164

use of mark-to-market accounting, 122–123

Revenue recognition, fraudulent


on IRU sales, 145–148

on IRU swaps, 117–120

Revenue recognition criteria

for bill and hold sales, 142

false representations, 147–148

transactions not satisfying, 21

Right of return, 141–142, 143

“Right of way” agreements, 146

Risk assessment. See Fraud risk assessment; Inherent risk assessment

Robinson, John, 83

Rooney, Phillip, 67, 69t, 106

Royal, 159

Rust International, 36t

S

Salaries and bonuses, 4, 63–64, 92

Sale(s)

of advertising space, 154–155

bill and hold sales, 21, 142–143

discounts and incentives, 141–142

of indefeasible rights of use, 145–148

of inventory, 21, 138–139, 140

of IRUs. See Indefeasible rights of use

of joint venture interests, 163–164

profit/sales ratio, 159

Sale of assets

capital equipment, 101

GAAP on specification of assets sold, 146

gain on sale, 8

indefeasible rights of use, 145–148

nonrecurring revenue and, 101, 101t–102t

Sales incentives, 141–142, 143

Sales quotas, in IRU swaps, 118

Sales return policies, 141–142, 143

Santa Fe Trails Ranch II, Inc., 162–163

Sarbanes-Oxley Act of 2002, 1

Scheutz, Walter, 122

Schipke, Roger, 44

Schneeman, David, 134

Scott, Stephanie, 16

Scott Paper Co., 43, 44, 137, 141

Securities and Exchange Commission (SEC)

charges against Qwest, 147–148

on consulting services to audit clients, 4

Enron investigation, 10, 10n

permission to use MTM accounting, 123

sanctions against Fund of Funds, 56, 57

Staff Accounting Bulletin No. 101, 143n, 219n

suit against Andersen, 11–12, 12n

See also Accounting and Auditing Enforcement Releases; Auditing and Enforcement Releases

SEC v. Buntrock, Rooney, Koenig, Hau, Getz, and Tobecksen, 33n–35n, 67n, 68n, 73n, 105n, 125n, 126n, 129n,

130n, 181n, 182n, 183n, 186n, 189n, 194n

SEC v. Dunlap, Kersh, Gluck, Uzzi, Griffith, and Harlow (2001), 21n, 45n, 46, 137n–139n, 142n, 215n, 216n, 219n,

221n–223n

SEC v. Nacchio, Woodruff, Szeliga, Mohebbi, Casey, Kozlowski, and Noyes, 47n, 48n, 99n, 117n, 145n, 153n,

227n, 228n

SEC v. Qwest, 47n, 99n–101n, 117n–120n, 145n–147n, 153n, 227n, 230n–236n

Select Trading Group, Inc., 162–163

Selling, General, and Administrative (SG&A) costs, 138–139, 140

Service agreements, 34

Service revenue, 101

SG&A (Selling, General, and Administrative) costs, 138–139, 140

Side deals, 84, 85ex.

Significant transactions, 161–164

joint venture interests, 163–164

stock sales, 162–163

year-end transactions, 162

Simultaneous legally unrelated transactions (SLUTS), 120

Sithe Energies, 122–123

Skilling, Jeffrey, 64

SkyTel Communications, 40

SLUTS (simultaneous legally unrelated transactions), 120

Smith, Cynthia J., 5n, 175n, 176n

Smith, Rebecca, 5n, 176n

Spacek, Leonard, 25n, 84n, 258n

Special Investigative Committee Report (WorldCom), 15n–18n, 91n–93n, 133n–135n, 197n–207n

Special purpose entities (SPEs), 65, 111–115

Andersen’s disapproval of, 8–10

consolidation rules for, 112

failure to provide evidence, 115

JEDI and Chewco, 112–113, 114, 115

nonconsolidation of, 112

Speculative investments, 57–59

SPEs. See Special purpose entities

Spot prices, 30

Sprint, 39, 40, 41, 48, 49, 67

Squires, Susan E., 5n, 175n, 176n

Staff Accounting Bulletin No. 101 (SEC), 143n, 219n

Statement No. 125 (FASB), 112

Statement No. 140 (FASB), 112

Statements of Financial Auditing Standards No. 66, 163

Steinhardt, Michael, 44

Sterling, Terry Greene, 51n, 77n, 149n, 161n, 241n

Stewart, John E., 9n, 9–10, 43, 178n

Stock options, linked to reported revenues, 64

Sullivan, Scott, 15, 39, 91, 92, 93, 95, 96, 133

“Summary of Action Steps,” 13–14

Sunbeam Corporation


cash reserve accounts, 137–140



restatement of revenues, 143


sales to distributors, 142–143

Sunbeam-Oster, 44

SuperNet, Inc., 49

Supreme Court, U.S., 3, 29

Swartz, Mimi, 9n, 177n

T

“Take or pay” contracts, 30

Taranto, Lisa, 93

Technological obsolescence, 127–128

Telco Accounting, 135

Telecommunications Act of 1996, 39–40, 49

Telecommunications industry, 91

Texaco, 83

TFCI (The Foundation Companies, Inc.), 163–164

Thornburgh, Dick, 95, 95n, 207n–209n

Title transfer, 146–147, 148

Tobecksen, Bruce, 68, 71t

Tompkin, Jack, 122

Top management

changes to depreciation estimates, 130

false representations by, 147–148

lack of disclosure by, 106

pressure on subordinates, 100, 120

relationship with internal audit department, 96–97

turnover in, internal controls and, 67–68

“Top-side” adjusting journal entries, 17

changes to useful life of assets, 130

fraud and, 68, 105–106

internal controls and, 92, 93, 105–106

line cost accruals, 134

Troubh, Raymond S., 113n, 115n, 171n, 172n

TyCom Networks, 119

U

U.S. Oil of Louisiana, Inc., 25, 84

USA Waste Services, 73, 74

Useful life of assets, 127–128, 130

US West, 49–50, 102t

UUNET, 40, 49, 134

V

Valuation assertions, 82–83, 158–159

Valuation formulas, 122

Valuation guidelines, 83, 85ex.

Vinson, Betty, 134

W

Wall Street Journal, 84

Wasserott, Charles, 135

Waste Expo conference (1999), 74

Waste Management, Inc. (WMI)

accounting and billing systems, 74–75

capitalization of expenses, 125–128


depreciation and amortization, 129–130


formation of, 73



mergers, 73

“top-side” adjusting journal entries, 105–106

Watkins, Sherron, 5

Wessex Water Pic, 37t

Wheelabrator Technologies, Inc. (WTI), 37t

Williams Communications, 48

Winokur, Herbert S., Jr., 113n, 115n, 171n, 172n

WMI. See Waste Management, Inc.

WorldCom, Inc.

audit department-management relations, 96–97



internal audits, 95–98

internal control systems, 91–93, 95–96

line cost accruals, 133–135


restricted access to information, 16–17, 92, 98

Special Investigative Committee Report, 15n–18n, 91n–93n, 133n–135n, 197n–207n

WorldCom Group, 41

Write-downs of assets, 138, 140

Write-offs of impaired assets, 126–127

WTI (Wheelabrator Technologies, Inc.), 37t

Y

Yeack, William R., 5n, 175n, 176n

Year-end transactions, 162

Documents

Index [the-eye.eu] fileArizona Corporation Commission, 79 Arizona Southern Baptist Convention, 51–52 Arms-length transactions pricing policies, 58, 58ex., 158–159 revaluation of